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US: Bad times for biodiesel producers

THE US biodiesel business is on life support, waiting for legislative action that could save it

A tax incentive that has been sustaining this infant industry lapsed on 31 December, eliminating the $1 a gallon (USG) subsidy that had offset biodiesel's higher production costs and had kept it competitively priced with conventional, petroleum-based diesel. The Congress, whose attention was riveted on health-care reform, failed to extend the subsidy, which had been in place since 2004. That was bad news for an industry that already had been undermined by tight credit markets, a production-capacity glut, rising feedstock prices, a recession that weakened motor fuel demand and a five-year tariff imposed on biodiesel imports from the US by the EU, which accounts for more than three-quarters

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